Home Daily Commentaries Australian dollar range bound in the face of stronger US consumer sentiment

Australian dollar range bound in the face of stronger US consumer sentiment

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 29 May, 2024

Daily Currency Update

The Australian dollar bounced within a narrow trading band through Tuesday, spending much of the day bouncing between US$0.6660 and US$0.6670. Markets largely ignored the softer than anticipated April retail sales report and instead looked to news from China wherein officials elected to relax rules surrounding the purchase of property in Shanghai. The changes are designed to reinvigorate the flailing property market and boost domestic activity. The AUD touched intraday highs at US$0.6680 before stronger than expected US consumer confidence data and an uptick in US treasuries prompted a move back below US$0.6650. The AUD opened this morning at US$0.6645.
Our attention now turns to the April CPI report. We expect price pressures will have contracted 0.1% year on year yet still sit well above the RBA’s target 2-3% band. A print above 3.4% will elevate calls for the RBA to consider another rate hike, while a faster decline in price pressures will bring forward bets for a rate cut and could dampen near-term AUD demand.

Key Movers

Price action across major currencies was largely muted through trade on Tuesday with the USD recovering losses suffered through the Asian and European sessions on the back of stronger than expected US consumer confidence and a weak US treasury auction. Treasuries yields rallied following softer than expected demand for US treasury bonds, helping fuel USD gains won following a surprise jump in the conference boards measure of consumer confidence. Leading data had suggested consumer confidence was beginning to falter but the strong print has elevated expectations around US rates with the economy seemingly strong enough to withstand an extended period of higher rates.
While it had little net impact on currency markets the Japan Services PPI report rose near 3% in April to its highest point in over 30 years, elevating calls for the Bank of Japan to tighten policy further. After forcing the USD back toward ¥156.50 the yen gave up gains and again is trading near ¥157.20.
Our attention today turns to German CPI numbers and the Fed’s beige book for direction leading into June Central Bank policy updates.

Expected Ranges

  • AUD/USD: 0.6580 - 0.6680 ▼
  • AUD/EUR: 0.6080 - 0.6150 ▼
  • GBP/AUD: 1.9000 - 1.9300 ▲
  • AUD/NZD: 1.0780 - 1.0880 ▲
  • AUD/CAD: 0.9000 - 0.9100 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.